2013: Vol. 12, No. 2

The enduring significance of history, culture, and perception in China’s contemporary scene is amplified by the articles in this issue of China Currents. David Blair writes about the role that historical memory plays in Chinese and U.S. strategic thinking. Arguing…

The U.S. and China share many fundamental interests. Their economies are so tightly inter-twined that any disruption would be extremely painful to both sides. There are no substantial, quantifiable disagreements between the two countries — meaning that there are no direct territorial disputes and neither country would gain by directly threatening the other’s vital interests. With so little to gain, and so much to lose, one might conclude that the probability of armed conflict between them would be negligible. But, it is not reassuring that the current disputes are not about “real” resources. Arguments about what are ultimately relatively small assets could be settled by economic agreements and compromise. The current disputes between the U.S. and China are more dangerous than they first appear because they are driven by each nation’s elite and public core beliefs, which were learned from key national historical experiences.

Comprehending behaviors of nation-states has never been easy. Understanding China is particularly difficult given the great divide in terms of language (yu yan) and culture (wen hua). Beijing is conscious of this difficulty in communicating with the rest of the world. To tackle the “hegemony of discourse”— perceived in Beijing as a persistent effort by the West to project a negative image of China and promote “western values” for maximizing its own interests1 —and to overcome its own weakness of the “power of the word” (hua yu quan), China has embarked on vigorous cultural diplomacy (CD), a strategy used since ancient times for communicating with the rest of the world. China considers culture essential in correcting adverse impressions created by its rapid strategic rise. Consequently, culture has emerged as the third pillar of Chinese diplomacy after economics and politics, with the 18th Congress in 2012 endorsing its relevance and the more recent Third Plenary in 2013 reaffirming its importance. Cultural diplomacy and soft power are important strategies for the Chinese leadership in developing benign impressions about China and securing strategic dividends through “virtuous” policies of engagement.

China’s accomplishments in economic modernization, urbanization, industrialization, and science and technology are legion. The question to which China watchers, as well as the Chinese state, have now turned is how will China spur and sustain its future economic development? Research and media reports have shown that the low-wage, capital-intensive, and export-oriented strategies using China as a final assembly platform are providing diminishing returns. Future growth will be both slower and more difficult. China must therefore find new engines for economic progress.

China, with a rapidly increasing middle class, has drawn tremendous attention from foreign retailers and become one of the hottest markets in today’s global economy. By some measures foreign retailers have done well, even though Chinese retailers dominate the market. The number of foreign retail stores in the Top 100 increased faster than their Chinese counterparts in 2010, even though foreign retailers had slower sales growth compared with Chinese retailers (18 percent for foreign firms compared with 25 percent for Chinese retailers, according to a Deloitte report). Six major foreign supermarkets opened 135 new stores in 2010, up 22 percent over the previous year, and seven foreign retailers increased the number of their stores by more than 20 percent in 2010.

(Editor’s note: The following are the author’s verbatim notes for a speech he delivered to the Atlanta chapter of the U.S.-China People’s Friendship Association in October 2013.)

Xinan Lianda – Southwest Associated University – was an amalgam of three institutions that fled Beijing and Tianjin in 1937 at the outset of the Second Sino-Japanese War. These were Peking University, Tsinghua University, and Nankai University. Lianda kept the light of learning burning in Kunming for eight years of war in the face of Japanese bombing, material shortages, devastating inflation, and official oppression that sometimes morphed into terrorism.